Supplier selection in supply chain management with disruption risk and credit period concepts

Supplier selection is one of the most critical activities of purchasing management in supply chain and managers increasingly face sourcing decisions of how to selected suppliers. This paper illustrates the development of a sourcing decision that provides support for the buyer firm in supply chain. The models developed here, involved selecting between single and dual sourcing. Outside and local suppliers are considered in our model. To encourage the buyer for purchasing from the local supplier, he gives the credit period to the buyer that is determined according to the partner’s opportunity costs. In this paper first the researchers model and explain this problem. Then the model is solved and critical decision values are identified. These are the base values used for sourcing selection. Finally, numerical examples are solved to show the model and illustrate numerical sensitivity analysis.